Will German GDP/IFO be the catalyst to take EUR/USD back above 1.3000?

The EUR/USD finished the session sharply higher, mainly benefiting from a better than expected European PMI data print. It will be another busy upcoming economic session in Europe, with German GDP due out at 6:00GMT, followed by German IFO at 8:00GMT. One has to ask, if the print comes in better than expected, will it be enough to take the pair back above the critical resistance level of 1.3000(the 20dma)? According to analysts at Rabobank, “there was a modestly firmer tone, maybe a ‘less downbeat tone’ is a better description because despite improvement they remain sub-50, to the suite of eurozone PMIs. In Germany, the Manufacturing PMI gained to 49.0, up from April’s 48.1 and the Services PMI ticked up to 49.8 from 49.6. France’s Manufacturing PMI increased to 45.5 from 44.4 and the Services PMI held steady at 44.3. For the eurozone as a whole, the Manufacturing PMI gained to 47.8 from April’s 46.7.”

They went on to add,“there’s no particularly strong message in these data but they are consistent with our thinking – and that of the ECB – that Europe’s economy will show some improvement as this year unfolds. Calmer financial market conditions should pay a positive dividend to the real economy over time.” The ‘risk on’ vs. ‘risk off’ sentiment of the equity market will also be something to keep in mind. It was interesting to see the EUR/USD go well bid on a day when the Nikkei dropped 7%. However, its hard to imagine this correlation continuing should US equities start a serious correction. Furthermore, some analysts believe that just because the recent EU PMI data came in better than expected, EU officials will not deviate from the dovish rhetoric which has been plentiful in recent weeks. https://support.fxcc.com/email/technical/24052013/

Upwards scenario: EURUSD consolidates prior macroeconomic news announcement. Our next resistive barrier is seen at 1.2945 (R1). Break here is required to drive market price towards to next visible targets at 1.2962 (R2) and 1.2978 (R3) later on today. Downwards scenario: Although market players may prefer to increase exposure on the short positions and push the price below the support level at 1.2903 (S1). Possible price devaluation would suggest next initial targets at 1.2886 (S2) and then 1.2867 (S3).

Upwards scenario: Market players may prefer to stay neutral today during limited tier one macroeconomic data flow from Japan, though a break of our resistance at 102.00 (R1) would suggest next targets at 102.35 (R2) and 102.70 (R3). Downwards scenario: A short-term technical structure might turn into negative side below the support level at 101.07 (S1). Possible price depreciation would then be targeting support at 100.76 (S2) en route to final target at 100.43 (S3).